Sunday, September 21, 2014

Running a Business with No Employees

This week New York magazine profiled a new type of business, and while it has nothing to do with teaching, it's a business model that those of us who work in the ed biz should pay attention to.

Modern business leaders in America face what seems to them to be a dreadful problem-- employees who want to be paid. Earlier this week, I was involved in a bloggy exchange with Neerav Kingsland, and both he and commentors on his blog were clear that what they see as a problem in the education business-- labor costs are too fixed and too high. They really, desperately, want to be able to repurpose all that money that is going to employees, the better to make their business "nimble" and "robust."

The New York article highlights the up-and-coming way to do that. Do not hire employees. Hire independent contractors.

This is not a brand new idea. Virtually all of the writing work that I've done over the last two decades has been as an independent contractor (well, except things like this blog, for which I'm paid in satisfaction, eyestrain, and a cleared-out head) . I don't get a W-2; instead, I get a Form 1099. That means I also don't get benefits, retirement, and, as a bonus, I get to pay some self-employment taxes to Uncle Sam. It's a sensible approach for a writer. I don't go in to work, my bosses don't really boss me, and I set my work hours. It's very flexible, which makes it easy to fit it in with the work I do that actually supports me.

But what if we extended that idea to other businesses? Uber doesn't "hire" anybody to drive you around; they just maintain a middleman kind of system. The article starts with an example from Homejoy-- hire a house cleaner for just $19 (and try not to shocked when he turns out to be homeless).

There's some economic sense in it. How do you get a business started when there's not really enough money in the potential market to make the business profitable or even do-able? Lower the labor costs hugely by using contract labor that is paid by job, not by hourly rates, and costs you $0.00 for benefits and pension costs.

For some workers this makes for a great way to earn some extra money on the side. For other workers, this makes for a way to get screwed (which reminds me that, yes, the world's oldest profession has tended to use the contract employee model as well).

But I think it also marks a continued shift in our fundamental model of a business's responsibilities to the community. Lots of Americans continue to believe that if you are able-bodied and willing to work, you should be able to support yourself. We are being exceedingly slow to catch on to just how many people in this country are now working poor-- employed and working hard, and yet not being paid enough to live.

Understand, I am not an opponent of profit. Making money is a great and worthwhile objective for a business. But in the "Not MY Problem" economy, many businesses no longer feel any need to provide jobs at which people can make a living. "Roll up your sleeves and we will make sure that you get an honest day's wage for an honest day's work," was once a thing that employers would say with pride. But it's being replaced with "We'll use you when it's handy for us and pay you as little as possible."

I am sure that some 1099 Biz operators are doing their best to serve both employees and business interests. But it's also clear from the article that some businesses are just using the model as a way to slash payroll costs dramatically. Shame on them.

Why mention any of this in an education blog? Because this contract employee model is one that many edbiz operators are excited to use themselves. It is easy to see how a charter school company could really boost that bottom line by simply using contract employees-- teachers who are only hired for a year at a time (or even less) but as contract employees do not get benefits or retirement. (As Paul Thomas smartly observed, "TFA, anyone?")  If you didn't think such a thing was possible or viable, I have a bridge I'd like to sell you. But first, I suggest you read the New York article.

[Update: While this may be a new sort of thing in the US, the world already has plenty of experience with independent contractors in teaching. Check out Alyssa Hadley Dunn's expose of Teachers Without Borders and take a look at this post on Teacher Solidarity, a blog that keeps an eye on the international teaching scene from the UK. ]

1 comment:

  1. This article is very interesting to me because I am looking start my career in this field... After reading this article I am so happy with my decision...